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DECISION

DECISION

Approving the Scheme on development of Vietnam’s capital market up to 2010 with a vision toward 2020

THE PRIME MINISTER

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the July 12, 2006 Law on Securities;

At the proposal of the Finance Ministry in Report No. 22/TTr-BTC of March 28, 2007,

DECIDES:

Article 1.- To approve the scheme on development of Vietnam’s capital market up to 2010 with a vision toward 2020 with the following principal contents:

A. Objectives

1. General objectives:

To develop Vietnam’s capital market, in which the securities market plays a dominant role, in a fast, synchronous and sustainable manner into an important component of the financial market, thus greatly contributing to mobilizing capital for development investment and economic reforms. To ensure the publicity and transparency and maintain the order, safety and efficiency of the market and enhance the market management and supervision. To protect lawful rights and interests of investors. To step by step raise the market’s competitiveness and accelerate its proactive integration into the international financial market. To strive for the target that by 2020 Vietnam’s capital market will reach the development level of the regional countries’ capital markets.

2. Specific targets:

To develop a versatile capital market to satisfy the capital mobilization and investment needs of all entities in the economy. To strive for the target that the securities market’s capitalized value will account for 50% and 70% of GDP by 2010 and 2020, respectively.

B. Viewpoint and principles for capital market development

1. To form and develop synchronously the structure of the capital market, in which the securities market plays an important role, ensuring efficient mobilization and distribution of investment capital sources for economic growth; to closely combine the capital market with the monetary market in harnessing inflation and maintaining monetary stability; to successfully integrate the domestic capital market into the international capital market.

2. To build and develop a rationally structured capital market, ensure the transparency of the market’s operation, and raise the competitiveness of organizations and individuals involved in market activities.

3. To organize the operation of the capital market in a safe, efficient and sound manner; to assure national financial security.

C. Solutions

1. Long-term solutions:

a/ Developing the capital market (consisting of stock market, bond market, market of derivative instruments, listed market, over-the-counter (OTC) market, etc.) into a modern and structurally complete one operating according to the best international practice and connectable with regional and international markets.

b/ Vigorously developing capital supply channels both at home and abroad for the market; expanding the network of investors, especially institutional ones; fully developing intermediary institutions; diversifying provided services; and ensuring the existence of all components of a developed capital market in the region.

c/ Closely combining monetary policy with fiscal policy; harmonizing the objective of mobilization of capital for economic growth and sustainable development of the capital market with the objective of maintaining macroeconomic stability, inflation control and national financial security.

d/ Enhancing the state management and effectively perform the function of inspecting and examining the observance of law by organizations and individuals involved in market activities.

2. Short-term solutions:

a/ Scaling up the volume, raising the quality and diversifying types of commodities to meet the market demand:

- To scale up the volume and diversify types of bonds as well as modes of issuance of government bonds, municipal bonds and corporate bonds on the capital market; to develop all kinds of convertible corporate bonds and project bonds for investment in key national infrastructure projects;

- To accelerate the implementation of the program on equitization of state enterprises, corporations, economic groups and state-owned commercial banks, and combine the equitization with the listing on the securities market; to expand the issuance of new stocks to raise capital on the market. To request all equitized enterprises which fully satisfy the listing conditions to be listed. At the same time, to review and continue the sale of state capital proportions in enterprises in which the State does not need to hold shares. To transform foreign-invested enterprises into joint-stock companies with their shares listed and traded on the securities market;

- To develop such derivative securities as call options and put options; future contracts; term contracts; combined products (securities-insurance, securities-credit, savings-securities, etc.); and products obtained from securitization of assets and liabilities.

b/ Step by step perfecting the structure of the capital market and ensure the state management and supervision:

- To separate the bond market from the stock market in order to form a specialized bond market. To step by step study, form and develop a future trading market for derivative instruments and a market for securitized medium- and long-term bank loans;

- To develop the stock market at various levels to meet the needs for issuance, listing and trading of stocks of various types of enterprise and facilitate the state management and supervision in the direction of separating the formal trading market from the OTC market and the market for issuance and trading registration of small- and medium-sized enterprises;

- To transform Securities Trading Centers into Stock Exchanges operating as companies under the Securities Law. Stock Exchanges and Securities Trading Centers shall perform the function of organizing and supervising securities trading activities. To completely upgrade the market’s technical infrastructure, thereby ensuring its connectability with regional markets.

- To organize and manage the OTC securities trading market with the following solutions: effecting the registration and depository of stocks of joint-stock companies satisfying all the conditions specified by the Securities Law; to study a mechanism for trading securities unqualified for listing under agreements between involved parties brokered by securities companies; to pay for securities transactions and transfer securities through the Securities Depositary Center; at the same time, to establish a mechanism for overseeing information disclosures on the securities trading market in order to ensure the market’s publicity and transparency and the state management and supervision of securities transactions, and narrow the operation of the uncontrolled market.

c/ Developing intermediary institutions and market services:

- To rationally increase the number of companies, raise the quality of operation and financial capability of securities companies, fund management companies, securities investment companies, etc. To diversify services provided on the market, and improve the professionalism and quality of services; and to ensure the publicity, transparency and equality of the market;

- To expand the scope of operation of the Securities Depositary Center, apply international depository standards, and effect interlinked payment transactions between the capital market and the monetary market;

- To step by step form a credit rating market in Vietnam. To permit credit rating institutions which fully satisfy the specified conditions to be established in Vietnam and prestigious foreign credit rating institutions to conduct credit rating operations in Vietnam.

d/ Developing the system of domestic and foreign investors:

- To encourage professional investment institutions (banks, securities companies, insurance companies) to invest in the market under the Vietnamese law. To open the Vietnamese market for foreign professional investors according to the committed roadmaps;

- To diversify types of investment funds; to create conditions for Vietnam Social Insurance, Post Savings, etc., to make investments on the capital market; to step by step develop and diversify pension funds to attract investment of the population; to promote the setting up of foreign investment funds to make long-term investment in Vietnam.

e/ Perfecting the legal framework and improving the effectiveness and efficiency of the state management and supervision:

- To build a consistent and complete legal system satisfying the management and supervision requirements and the need for integration with the regional and international capital markets;

- To additionally prescribe severe civil sanctions and penal punishments for the purpose of preventing and handling acts of violation on the capital market and the securities market;

- To study and perfect policies on taxes, charges and fees on securities activities, promotion of long-term investment and limitation of short-term investment; to regulate earnings from securities business and contribute, by using the tool of such taxes, charges and fees, to supervising activities of the securities market and each entity or member joining the market (both domestic and foreign investors);

- To apply market supervision standards in conformity with international practice; to intensify the inspection, examination and supervision of market members’ observance of law; to inspect and control marketed goods, ensuring the publicity and transparency; to enhance the supervising and enforcing capacity of the market supervision agency;

- To consolidate the state management and supervision apparatus and improve the state management and supervision of the capital market; to gradually separate the function of managing from the function of supervising market activities; to study as soon as possible the establishment of a national financial supervision agency which will assist the Prime Minister in coordinating the financial and monetary policy implementation and act as a tool for warning, managing and supervising macro-level financial and monetary activities.

f/ Actively opening the market and integrating with the region and the world:

- To step by step open the capital market for foreign investors according to the committed integration roadmap and concurrently control the capital inflow and outflow; to expand international cooperation in policy and law consultancy and market development;

- To step up the training and development of human resources for the capital market; to intensify the dissemination of capital market and securities market knowledge among the population, enterprises and economic organizations.

g/ Assuring national financial security:

To effectively supervise capital transactions; to apply measures to strictly control capital flows; when necessary to reduce the exchange rate pressure and preclude market deformity and crisis risks, to devise appropriate handling measures. Those measures must be promulgated in legal documents and notified to investors and may only be applied when the security of the financial system is at danger. To apply the mechanism of special supervision of weak intermediary institutions in order to minimize negative chain-reaction impacts in the entire system.

Article 2.- Organization of implementation

The Finance Ministry shall assume the prime responsibility for, and coordinate with other ministries, ministerial-level agencies, government-attached agencies and provincial/municipal People’s Committees in, organizing the implementation of this Decision.

Article 3.- This Decision takes effect 15 days after its publication in "CONG BAO" and replaces the Prime Minister’s Decision No. 163/2003/QD-TTg of August 5, 2003, approving the strategy for development of Vietnam’s securities market up to 2010.

Article 4.- Ministers, heads of ministerial-level agencies, heads of government-attached agencies, presidents of provincial/municipal People’s Committees, and heads of concerned agencies shall implement this Decision.